Cash EBITDA definition
What does Cash EBITDA mean? What's the **difference **with EBITDA?
Any example would be very much appreciated.
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One major thing that Cash EBITDA includes is change in deferred revenue. That is, EBITDA only captures the revenues able to be recognized by GAAP but not bookings made that you have received cash for that aren't yet able to be recognized as revenue. Cash EBITDA takes EBITDA and adds change in deferred revenue.
Then when you bridge from Cash EBITDA to FCF, you remove deferred revenue from the change in net working capital calculation to avoid double counting. Why not just leave it in change in NWC and not bother calculating the Cash EBITDA if you get to the same FCF either way? It's because investors, especially debt investors, are often interested in a leverage metric on EBITDA that more closely approximates cash. Leverage will therefore look lower on a Cash EBITDA basis compared to EBITDA but be more "accurate" in terms of cash flow.
Other than change in ST DR, what else is accounted for in Cash EBITDA? Anything related to capex spending?
Typically includes change in total deferred revenue and change in total deferred commissions.
What are you on about here? Maybe you're on the right track, but your way of explaining is off / confusing. Change in deferred revenue is an operating cash flow activity. Increases/decreases in deferred revenue happen to get reflected in the GAAP revenue, which impacts EBITDA.
But Cash EBITDA as the term implies reflects the cash portions of revenue and expenses. A good example here is interest that can be paid in cash and PIK, in the Cash EBITDA, PIK component of interest would not be added.
Super clear, thx
Ebitda is non gaap so it could mean whatever the fuck people want it to mean.
- Usual definition: EBITDA + change in Deferred Revenue. IB does this
Slightly more technically correct definition: Billings used instead of Revenue, and then expenses are applied as normal to get down to EBITDA. Sellside accounting firms will do this. Comes out to the same answer as above
- Very very correct definition but only used if you're on the buyside: Cash EBITDA + change in DR - change in deferred commissions. If you're treating the Rev on a cash basis you shouldn't then get the benefit of the sales commissions being spread over multiple years. Sellside will never do this but sponsors and their accounting DD advisors will sometimes do this
Lenders and sponsors will / may negotiate over this. If you want to learn more, just google "cash eBITDA" and "term sheet" and "pdf" and "[insert some lenders name"']. For instance, HPS Investment Partners, Golub, Oaktree. Do it for a few and you will see how this is being calculated.
Cash EBITDA is a measure of a company's operating performance that takes into account both its cash flow and its earnings. Unlike traditional EBITDA, which focuses only on earnings, Cash EBITDA also takes into account the amount of cash generated by a company in order to provide a more comprehensive view of its financial health and performance. In general, Cash EBITDA is considered to be a more useful measure than traditional EBITDA, as it provides investors with information about a company's ability to repay its debts and cover its operating costs.
EBITDA and EBITDA are two different financial metrics that are often used to measure a company's performance. While EBITDA is typically defined as earnings before interest, taxes, depreciation, and amortization (EBITDA), the meaning of EBITDA can vary depending on the industry or context in which it is being used. In general, though, EBITDA is used as a way to measure a company's profitability and operational efficiency.
There are a few key differences between EBITDA and EBITDA. First, EBITDA includes depreciation and amortization in its calculation, while EBITDA does not. Depreciation and amortization are non-cash expenses, meaning that they cannot be used to directly pay off any existing debts. As such, EBITDA is typically viewed as a more accurate representation of a company's cash flows and financial performance.
Probably means that it backs out the non-cash/stock comp-portion of G&A that makes it's way into EBITDA
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